all content solely reflect the sleepless nights, as well as the hand-wringing days of the authour.

Use without permission will result in firsthand demonstration of a different kind of hand-wringing.

Aug 2 Paid Content Battle on OTT Messaging

The frontier is content monetization; OTT messaging is poised to own paid content distribution

Video Killed The Radio StarIt’s a winter coat cold April. KakaoTalk’s lair lies in Seoul’s Techno Valley on the relatively new pink subway line, less Kraftwerk than something out of Ayn Rand. The same area hosts NHN Naver with their “Green Factory”, a 28-story building complete with special UV areas to disinfect your toothbrush after lunch; Ahn Labs, a well-regarded anti-virus security firm for the mobile web that is the namesake of Ahn Cheol Soo, the independent ticket for the last presidential campaign; and since it’s Korea, one of Samsung’s many tentacles lies close by.

Sirgoo Lee (CEO of KakaoTalk) and I talk casually; he wears a soft, pale blue sweater over a t-shirt, with a relaxed haircut–- uncommon for Korea’s corporate culture. The interview revolves around the Messenger wars, along with a little segue into creative content and ownership. I mention Facebook and its impending Home as the largest threat to the OTT messaging space and Kakao’s own launcher; he chuckles. At the heart of this conversation he specifies, “We co-habitate in a similar space, but we don’t see them as direct competitors. We’re a mobile communications platform company, not a web service. The nature of what we provide is private, between users, and not a public service."

KakaoPage launches not after our conversation, a marketplace for content creators on top of KakaoTalk. Then into my inbox this little chestnut arrives:

"Daily OTT messaging traffic has already overtaken daily P2P SMS traffic in terms of volume, according to newly collected data from Informa, with an average of 19.1 billion OTT messages sent per day in 2012, compared with an average of 17.6 billion P2P SMS messages…

By the end of 2013, Informa estimates that 41 billion OTT messages will be sent every day, compared with an average of 19.5 billion P2P SMS messages. However, there are far more P2P SMS users than there are OTT messaging users: There were about 3.5 billion P2P SMS users in 2012, according to Informa, compared with about 586.3 million users of OTT messaging. Each OTT user sent an average of 32.6 OTT messages a day, compared with just five SMS messages per day per P2P SMS user, meaning that OTT-messaging users are sending more than six times as many messages as P2P SMS users do."

Translation: there are ever more smartphones, the smartphones are getting smarter than the humans who sell and consume them. And oh god, how many messages will we send via how many different messengers when smartphones really take over. Here isn’t merely the one-for-one replacement of SMS, but the rise of an entire marketplace of messaging apps riding on Internet Protocol, ready to take over all the voice traffic and digital goods commerce. They aren’t just for tap tap tapping that glass anymore.

Here was not just a failing business model, here is a marketplace.

Content necessarily negotiates delivery and ownership: show me the moneySo the marketplace calls for content, and content has ownership. In the abstract it sounds reasonable, but what does it mean to, say, own weather data? Real-time transit data? A song that is being played on the radio for free? Or, for sasang.ge’s simple purposes, a written article? As I write this post, I certainly hope I own it, though it is certainly for free and is being distributed for free on Tumblr; Tumblr calls itself a publishing tool for content creators, after all. If this post gets re-blogged or shared, it is akin to having a song that I wrote being played on the radio–- to no monetary benefit, but to be distributed. This is exactly what KakaoTalk, via KakaoPage, was pushing away from, in that cold, miserable April. KakaoPage allows content creators to monetise their work immediately.

Content independent of messaging is going to have some serious engagement problems. In the US, the ideal paid content distribution in my mind is a magazine beautifully done on something like Tumblr and through Babblr (a messaging platform on top of tumblr); combined with ownth.is (a payment system). Those who still hang on to content-only destinations can go visit the stunning work of Atavist or 29th Street Publishing, but those audiences aren’t the future. Sorry Flipboard.

Capitalism is about marketplace, not business modelsAt the moment – sorry Facebook too. The new games publishing program is a great step in the marketplace direction, but other content needs a cash register. And Facebook needs credit card numbers or other billing relationships.

While most consumers may see Facebook Home as yet another nifty product, it is very much a reaction to market movement. One way to explain the OTT turf wars is to understand that OTT and Facebook are battling squarely for the same space. Here is one definition by Tencent’s WeChat, the second most popular messaging app in the world after WhatsApp:

"WeChat is the complete mobile communication and private social networking app. Free, cross-platform, and full-featured, WeChat is the best way to keep in touch with everyone you care about.” WeChat tells me that as a software it is trying to solve how to put these functions together: communication, sharing, gaming. It’s essentially a navigation system for content for how you want to watch it or when you want to read it– managing real estate, on anything with a surface, whether it be through XBox or Apple TV, on a table top, or a Samsung Galaxy IV.

Software eats industry, again.

tl;dr

1. OTT Messaging is already killing SMS on volume, even with a small fraction of SMS’s audience reach. If anything saves mobile carrier margins, it will be their billing.

2. Paid content players, i.e. publishers, among others, have it in their interests to partner up OTT messengers as distribution platform, a communication platform with a built-in cash register.